Filed under: Deals, Activist investing, Shareholders, Public or private?

There may be a catch in the Amazon.com (NASDAQ: AMZN) buyout of Audible.com Inc. (NASDAQ: ADBL). Red Oak Partners, LLC is a shareholder that owns 364,400 shares of Audible (approximately 1.4%) and it is in opposition of the buyout terms and the price that was concurred to.

The holder has sent a letter to both companies in a formal protest of the merger terms. It notes that the proposed acquisition of Audible at $11.50 per share isn’t sufficient. The holder notes that earnings and a filing would have generated a higher price rather than a lower price.

The holder notes that there are no direct comparable companies to Audible and that the $11.50 price fell below what Red Oak calculated as the discounted cash flow equity values of $15.38 to $21.99. There are several other complaints in this letter, and you’ll need to refer to it for the full details as the letter is long and thorough.

The long and short of the matter is that Red Oak opposes this buyout offer it does not intend to tender. There is one important issue here that investors might want to pay attention to. Gabelli made a similar protest over the buyout price of Cablevision (NYSE: CVC) being inadequate. That deal wasn’t the same sort of merger as it was a Dolan-led management buyout, but that offer ultimately failed and those shares have lost one-third of their value with what looks like diminishing fundamentals ahead from today.

A failed merger of Audible.com would probably take shares back under $10.00, so with shares at $11.48 this morning it might be a chance to take at least some of the buyout price as a hedge in case the holder is able to block this deal. Can a higher price come? Sure. But we’d advise looking at the stock market before counting these eggs before they hatch. The NASDAQ is down more than 15% year to date, and many small cap World wide web stocks are down far worse than that.

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This entry was posted on Tuesday, March 11th, 2008 at 2:13 pm and is filed under Engagements and Deals News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.